Barclays double downgrades Lavoro on credit policy in Brazil

Barclays downgraded Lavoro (LVRO) to Underweight from Overweight with a price target of $1.50, down from $5. The firm cites a more risk-averse credit policy in Brazil following the bankruptcy of peer AgroGalaxy in mid-September for the double downgrade. As a result, banks tightened credit policies and gave less flexibility to retailers – increasing the difficulty of building out an order book and inventory, the analyst tells investors in a research note. Additionally, FMC’s move to more direct-to-farmer sales in Latin America presents a headwind to Lavoro sales, contends Barclays.